Foreign direct investment (FDI) plays a critical role in fostering economic growth and innovation across the European Union (EU). However, the evolving geopolitical landscape and emerging security risks have prompted the EU to strengthen its regulatory framework for screening foreign investments. On 8 June 2026, the Council of the EU formally adopted the revised FDI Screening Regulation, marking a significant shift from the previous framework established by Regulation (EU) 2019/452. This article examines the amendments introduced by the regulation, their implications for Germany, and the broader consequences for investors navigating this evolving framework.
The revised regulation introduces several significant changes aimed at harmonising and enhancing the effectiveness of FDI screening across the EU.
(a) Mandatory Screening Mechanisms
Under the new regulation, all Member States are required to establish and maintain screening mechanisms for foreign investments. This marks a departure from the previous framework, which allowed Member States to voluntarily adopt such mechanisms. While almost every Member States already have screening regimes, the regulation ensures consistency across the EU.
(b) Expanded Scope
The new regulation broadens the scope of investments subject to screening:
(c) Harmonised Review Timelines
To streamline the screening process, the regulation introduces a standardised initial review period of 45 calendar days for phase one reviews. This procedural harmonisation reduces uncertainty for investors and ensures timely decision-making.
(d) Enhanced Cooperation and Transparency
The regulation strengthens the cooperation mechanism between Member States and the European Commission. It mandates broader information exchange, including the establishment of a secure EU database to facilitate data sharing and improve coordination for multi-jurisdictional filings.
(e) Common Minimum Scope
The regulation defines mandatory sectors for screening, including
Member States must ensure that investments, other than greenfield investments, in these sectors undergo prior authorisation.
The new regulation will enter into force 20 days after its publication in the Official Journal of the EU, expected in mid-2026. Member States will then have 18 months to amend their national frameworks to align with the new requirements. Full transposition is anticipated by end-January 2028.
Germany operates one of the most robust FDI screening regimes in the EU, governed by the Foreign Trade and Payments Act (AWG) and Ordinance (AWV). The new regulation will require several adjustments to ensure compliance:
(a) Alignment with Mandatory Scope
Germany will need to expand its list of sensitive sectors to include those mandated by the EU regulation, such as electoral operations management.
(b) Procedural Changes
The current timeline in the screening process needs to be revised to incorporate the 45-day initial review period. This may streamline the preliminary examination phase, which currently lasts up to two months.
(c) Greenfield Investments
Germany retains discretion over whether to include greenfield investments in its screening mechanism. While the EU regulation encourages screening of such projects, it does not mandate their inclusion.
(d) Expanded Criteria for Assessing Foreign Investors
The regulation introduces additional criteria for assessing foreign investments, including scrutiny of the foreign investor’s ownership structure, links to foreign governments or armed forces, and risks of pursuing third-country policy objectives through coercive means.
(e) Enhanced Cooperation
The German Federal Ministry for Economic Affairs and Energy (BMWE) will benefit from the secure EU database, which will provide access to broader intelligence on foreign investments in the EU. However, this increased transparency may also subject German cases to closer scrutiny from other Member States and the Commission.
The revised EU FDI Screening Regulation advances harmonization while preserving Member State autonomy, falling short of a centralized regime like CFIUS. Investors face significant practical implications: early due diligence is crucial to identify screening requirements, especially for EU subsidiaries of non-EU investors. Coordinating multi-jurisdictional filings simultaneously demands robust cross-border planning. Fragmented Phase II timelines and call-in risks post-closing add complexity, requiring regulatory buffers in transaction timelines. Strategic planning and proactive compliance are essential to navigate this evolving framework.
The adoption of the revised EU FDI Screening Regulation marks a watershed moment for foreign investment control in the EU. By mandating screening mechanisms, expanding scope, and enhancing cooperation, the regulation aims to address emerging security risks while ensuring consistency across Member States. For Germany, the changes will necessitate certain adjustments to its already robust screening regime. As the regulation becomes fully operational by early 2028, investors must prepare for a more structured and harmonised screening process across the EU.
